Impact of ERP Upgrades and Compliance on Process Manufacturing

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Upgrading Enterprise Systems for Success in Process ManufacturingAberdeen Group

2Copyright © 2015. Infor. All Rights Reserved. www.infor.comInfor Confidential

The promise of ERP systems for the Process Industry

As the foundation of a successful

manufacturing organization,

ERP helps

Discover potential operational efficiencies

Promote standards throughout the organization

Manage front and back-end processes


The Process Industry is not without challenges

Comply with regulations

Reduce operational costs

Face increased competition


Aberdeen highlights top pressures to improve operations

Customers demand lower costs Need competitive differentiation

53%

65%

14%25%

43%35%

Need to comply with current and future regulations

Compliance is almost double for Process

Manufacturers

Keeping costs low is the

top pressure

Competitive differentiation is important

Source: Aberdeen Group, August 2015

All Respondents

Process


What are the impacts of Process Compliance?

Maintaining compliance drives lower operational

costs and enables competitive differentiation!

Every year, compliance regulations increase in number and complexity

Out of compliance means millions in lost revenue

Without operational efficiencies, maintaining compliance can raise costs


What causes non-compliance for Process Manufacturers?

Once a year

25%

15%

21%

14% 14%

8% 9%12%

9%

15%

4%

8%

Every 2 years Every 3 years Every 4 years Every 5 years More than 5 years between upgrades

We do not perform upgrades

All Respondents

Process


Average Length between Upgrades to ERP

Process Manufacturers:

Average time between upgrades is over 3 years,

longer than all others

Twice more likely to not upgrade their ERP

systems at all

Primary reason for out-of-compliance is outdated enterprise systems

24%21%


Process ‘Leaders’ outperform ‘Followers’


Leaders drive higher level of compliance (99%)

This reduces impact on revenue due to out-of-compliance fines

Leaders deliver better process and operational efficiency

This reduces substantial costs associated with recalls

Leaders drive 9% higher Operating Margin than the Corporate Plan It increases top line


What are Process Leaders doing differently?

Leaders build compliance & traceability into their production systems

They have clear understanding & control of production processes

This in turn reduces dependence of testing to ensure higher quality

Leaders drive lower costs and stay compliant. Consequently they increase chances of success in a highly competitive industry!


Process Leader’s advantage: staying on top of technology!

Implemented on latest release

43%

27%

One release behind

40%

18%

Leaders

Followers


Process Leaders understand the pitfalls of

obsolete technology

Over 80% of Leaders are either on latest

release or one behind

Leaders are 59% more likely than Followers to be on the latest ERP

Why upgrade ERP? Outdated systems can’t handle new reporting & responsiveness requirements of regulations, resulting in costly non-compliance!


ERP upgrades drive Enterprise KPIs


Higher operational KPI’s 94% On time & complete shipments with upgrade Vs 87% without

Improve bottom line (KPI) 17% Reduction in inventory with upgrade Vs 9% without

Increase top line (KPI) +5% increase in operational margin with upgrade Vs -2% without

On Time and Complete Shipment

94% 87%

Reduction in Inventory

17%

9%

Operating Margin Vs. Corporate Plan

+5%

-2%

The Benefits of Upgrading ERP

Latest Version

Not on Latest Version


Cloud can help keep your ERP up-to-date

52% 45% 38%

38% 31% 28%

Lower Total Cost of Ownership

Configuration Flexibility

Reduced Cost and Effort of Upgrades

Ability to Scale Solution

Lower Upfront Costs

Ease of Use

• Cloud ERPs are constantly updated, with little disruption to the organization

• Cloud also lowers total cost of ownership (TCO) and scales easily

• So you can simply focus on serving your customers!


To summarize...

Process Manufacturers are under pressure to maintain compliance and keep costs low, gain competitive advantage

Process Leaders drive higher levels of compliance, better operational efficiency, and higher operating margins

They do so by keeping ERP systems up-to-date! Over 80% of them are either on the latest release of ERP or only one behind


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Impact of ERP Upgrades and Compliance on Process Manufacturing

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